Friday, October 29, 2010

A CNBC article reports that Working During Retirement May Be "The New Normal" according to a Barclay's survey. About 60 percent of respondents expect being involved in paid work of some kind for their entire life. Although some plan to work for financial reasons, many plan to work because it is an important part of their life. In some cases, retirees found time spent in post retirement activities was different than they had expected. Most telling was that for some, the interest in working during retirement increased after retirement.

For reference, the survey was done among 2000 people from 20 countries with more than $1.5 million in investable assets.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Thursday, October 28, 2010

It is fun watching our daughter learn and make progress. She has achieved several milestones in 2010.

Starting kindergarten. Our daughter is now attending "real" school on a full day basis. She has been looking forward to starting kindergarten for quite a while. After two months, she still enjoys school.

Scoring her first goal. In her fourth season of soccer, our daughter scored her first goal. She was very excited and we celebrated by going out for lunch afterwards. In the last game of the season, she made two more shots that barely missed by hitting the post.

Reading smoothly. I am amazed at how much our daughter's reading skills have developed in only two months of kindergarten. She recognizes many simple words and enjoys trying to spell new words. I was surprised today when she read and asked about a specific entry on my calendar.

Learning math. Our daughter considers math "boring," which makes me cringe since I consider math a fundamental skill. However, she seems to be learning basics of addition and subtraction. I still hope that she will like math enough to do well at personal finance :-)

Potentially, her next milestone will be riding a bike without training wheels. We started over the summer with a little progress. Lately, she has expressed more interest in learning which means we may be trying more frequently.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, education or parenting advice. Please consult a professional advisor.

Wednesday, October 27, 2010

Occasionally, we miss a payment due date due to misplacing a bill or not receiving one in the mail. However, rather than remit the late payment fees, I usually call customer service and request forgiveness. We have an excellent record of paying all our bills on time, so we usually get the late charges removed.

Here's an example of the conversation I have with a customer representative (CR):

Me: Hi, this is ____________ and I'm calling about my bill which I haven't paid. My apologies for being late. I didn't receive (or I misplaced) the bill this month which is the reason we didn't pay it. As you can see, we always pay our bills on time.

CR: Thank you for calling and letting us know about the late payment. Yes, I'm looking at your records and I can see you make timely payments.

Me: Since this our first time missing a payment, can you take off the late charge this time?

CR: Yes, that would be no problem to remove the late charge. I've credited the amount to your account.

Me: Thank you. I appreciate your help.

There has only been one instance where the CR would not forgive the late charges. I called on the day a credit card bill was due and explained we had just found the misplaced bill. I told the CR that we would send payment immediately and asked if he would take off the late charge. He responded that any payment received after the close of business that day would incur a late charge which could not be forgiven. However, he mentioned that payment could be direct debited on the same day from our account using their the payment option on their website; and by doing so, we could avoid late charges. We followed the directions and they received the payment before the end of day.

My request to forgive late charges is usually honored because our payment history is very good. So far, we haven't been late more than once for any of our accounts over the past seven years. If we had multiple late bill payments, I expect that a CR would be unable to take off any late charges.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to twelfth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries by the authors and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Insuring and Protecting

Investing

12 Stocks Sending A Strong Message With Higher Dividends - "One of the many reasons I like dividend stocks is because they provide continuous feedback. As time passes, dividend investors see their income grow steadily. You don’t have to wait five to ten years to determine if the strategy is working. Each dividend and dividend increase provides reassurance that the strategy is working."

Worst. Trade. EVER! … - "CNBC has been running a great segment on the Worst Trade Ever for industry leaders like Warren Buffett and Bill Gross. Hence, Darwin has shared his horrendous investments from his 20s; share yours as well."

Tax FREE Money Market Mutual Funds! - "Most astute investors are aware of municipal mutual funds also known as MUNIs. These funds invest in term debts issued by various state and local governments. In general dividends and gains from muni funds are exempt from federal as well as state taxes ..."

Monday, October 25, 2010

On September 1, 2010, I mentioned that our plan was to significantly increase our investments in the stock market in anticipation of a continued recovery. While this continues to be our plan, I've decided hold off making any large equity purchases until after the November 2, 2010 midterm elections. I think there is a reasonable possibility that the market may correct after the elections results for the following reasons:

A Republican win is already priced into the market. The rally since July 2010 has been very strong reflecting a believe that the midterm elections will eliminate the current Democratic majority in at least the House of Representatives. Historically, the market results have been good with a Democratic President and a Republican controlled Congress.

The elections results may disappoint the market. The latest polls show many of the races are tightening meaning Republicans may take fewer seats than originally anticipated during the summer. If the Democrats maintain a majority in both houses of Congress, a market sell off may occur.

I've positioned our portfolios to take advantage of possible market decline or a continued market advance. First, I've sold parts of positions into this rally, taking some profits and holding the remaining shares in case the market rallies. Second, I've sold some covered calls against my company stock which will provide a cushion if the stock declines or allow profits to be taken if the stock advances. Finally, I've set aside 1/2 of the cash in our managed retirement accounts to be invested whether the market declines or advances.

Psychologically, I feel better taking this hedging approach. While I may miss out on some gains, I will also mitigate any signficant decline that may happen after the elections results.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Sunday, October 24, 2010

It seems everybody is looking for the safety non-equity investments, including institutional pension managers. Pension Funds Flee Stocks in Search of Less-Risky Bets (subscription my be required) from The Wall Street Journal reports how many pension managers are reducing their stock exposure from 60-70% to 30 to 45% of their pension funds.

Here's what I think this phenomenon means:

Total stock market returns will be lower. There will be less demand for stocks, meaning lower total price for the stock market. We definitely won't be seeing the double digit returns of the nineties in the near term.

Stock picking will become more important. While the total market returns may be down, there will still be individual stocks which significantly beat the market. Finding companies which maintain a competitive advantage through innovation, business model or scale will be even more important.

Pension plans will reduce benefits or be eliminated. With lower returns, companies won't be able to guarantee current benefits without significantly increasing contributions. The alternative is to reduce benefits or move to a defined contribution plan. I believe many public sector pension plans will need to be modified, especially since tax increases will not be a popular solution.

Being a bit of a contrarian leads me to think that this may also be a good time to invest more in equities:-)

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Wednesday, October 20, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to eleventh edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with summaries, excerpts or author comments and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

And now onto the Carnival:

Earning

The Innovator in Each of Us - "Every one of us has exactly what it takes to be an innovator. A thought leader. A change maker. I realized that the heart and soul of innovation was simply this: being able to create an emotional experience that moves others forward."

Investing

A Tale of Recovery - "Today I release 'A Tale of Recovery' I think it should be required reading in every introductory investment class. It is a simple read but illustrates an important concept. It illustrates that a percentage loss hurts more than the equivalent percentage gain. It also introduces the concept of investing as a continuous process. We invest throughout our lives and so every day we start from the same point; all our money is invested."

9 Dividend Stocks Enriching Their Shareholders -"In one form or another, I get the this question, 'What do you think of the market? Where’s it headed?' Normally, I politely respond as expected, but occasionally I will startle the person with a reply like, 'I don’t know. For me it really doesn’t matter much.' My investing goals are not defined by movements in the market."

Defining Current Yield Criteria for Dividend Paying Stocks - "The dividend yield is one of the most commonly used financial ratios by income investors today. While not perfect, understanding a company’s current yield can help give insight into what type of return on investment you may expect to receive."

Investors still love divided government. A lot. -"In the short term, if investors believe that divided government is good for markets, that expectation can become a self-fulfilling prophecy. This may be what we are seeing now in anticipation of the November election results. Apparently the investor class really believes that divided government is good for the market and that the GOP will take the majority in at least one house of congress."

Four Quick Ways to Build A Strong Credit Rating! - "A lot has been written about credit rating and how we can go about improving it. There are companies offering professional services to help us earn better credit scores. But with a little contemplation we'll see that we don't need to spend our hard earned dollars on professional help for building a strong credit rating. It's simple, DIY (Do It Yourself) and boils down to the following four steps ..."

Retiree Financial Lessons from the Recession - "Although I wish this recession had not happened, I am glad that it happened early in our retirement, while we were better able to meet the financial challenges. Also, we learned the following lessons, which I'm sure will continue to help us through out our remaining retirement years."

Saving

Taxes

How to Save on Taxes This Year - "With the 4th quarter here, it is time for a reminder on some tax saving strategies, some of which will expire this year. Read on to find out how to maximize savings before the end of the year."

Monday, October 18, 2010

Approximately 40% of our retirement savings is still invested in the stock of the company from which I retired. The investments are divided into three categories: a retirement account at the company, stock options and a rollover IRA.

For two of the categories, I have clear plans for reducing company exposure. I plan to hold the company retirement account in stock until I'm 59-1/2 at which time I will use a Net Unrealized Appreciation withdrawal to minimize the taxes owed. The stock options will be exercised on an annual basis before expiration from 2012 through 2017. For the rollover IRA, I have not had a defined plan to reduce company shares. Essentially, I have been selling company shares periodically at what I think are attractive prices.

Given the large exposure to company stock, I have decided to use a covered call strategy and be more aggressive in reducing the shares in my rollover IRA. By selling a covered call, I am obligated to sell the stock at a certain price within a given time period. If the stock rises, then I will received the strike price for the stock plus the call premium. If the stock falls, then I will keep the call premium and can resell another covered call.

To have a good probability of selling, I have chosen strike prices that are 4-13% above the current price and expiration dates of 5 to 17 months, respectively. If the stock sells at these prices, I will receive less than the all-time high, but still a very good price. In addition, I will be able to reduce our exposure to my company stock by 7 % of our retirement savings. Hopefully, I will be able to sell all the company stock in my rollover IRA by early 2012.

Trough the end of 2018, the plan is to reduce company stock exposure by 7 % in 2011, 18 % from 2012 to 2017, and the final 15% in 2018. After 2019, we may still keep a small in company stock but at a level of less than 1%.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial, investment or retirement advice. Please consult a professional advisor.

Sunday, October 17, 2010

On Friday, October 15, 2010, I filed our 2009 tax returns. This was the final deadline under the six month automatic extension allowed from filing Form 4868. Why did I wait so long? Simply, because I could :-) I had already completed a rough draft of my tax return in early 2010, payed the estimate owed by April 15, and expected a small refund when I filed. Originally, I had planned to file this summer, but became over committed due to working several part-time jobs. September was busy with the start of school, various celebrations and some financial courses. Finally, in the first week of October, I did a final draft of my tax return. The following week, I finalized the return and mailed both the Federal and State tax returns.

For the past three years, I have justified filing an extension due to increasing complexity of our return from Roth IRA conversions, self employment income, limited partnership income, and stock option exercises. Each of these events created additional complexity for our tax return which I hadn't dealt with before. As a result, our 2007 - 2009 tax returns took longer to complete than I expected, requiring an extension past April 15. However, in 2010 I do not expect any new tax related complexities.

Thus, I plan to complete and mail the documents by April 15, 2011 so the my summer and early fall will be free from the burden of still needing to file a tax return.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Friday, October 15, 2010

When I retired in my forties in October 2007, I didn't expect a severe economic crisis to happen over the next three years. The decline in the stock market significantly impacted our ability to stay retired. Our retirement savings had dropped over 40% by early 2009. Fortunately, it appears the worst is over and, while slow, an economic recovery is underway. Similarly, our retirement savings are growing once again and have been increasing for the past two years even though we have withdrawn fund for living expenses during that time.

Although I wish this recession had not happened, I am glad that it happened early in our retirement, while we were better able to meet the financial challenges. Also, we learned the following lessons, which I'm sure will continue to help us through out our retirement years.

Keep short term fund needs in safe investments. We were fortunate to have about 5 years of living expenses in cash, money market funds and CDs. While these funds may have very low returns, we are guaranteed to have 100% of the principal when needed. Psychologically, we felt better not cashing investments that would have be sold at a loss. In addition, we were also able to give our investments time to recover.

We continue to keep about 3-5 years of living expenses in cash, money market funds and CDs.

Have a margin of safety. When I retired, we had almost 23 times my annual salary saved. Based on our calculations, we believed 20 times was very good and that 12 to 16 times was the minimum. In March 2009, our savings had fallen to 13 times my salary. At that point, I was very concerned about the feasibility of continuing my retirement. I'm sure I would have gone back to work if our savings had fallen to 8 times salary, which could have happened if I had retired at 13 times my salary.

Be prepared to reduce amounts withdrawn from savings. As our retirement savings fell, we took significant steps to reduce our savings withdrawal rate. First, we reduced our monthly living expenses primarily by paying off our mortgage. Our living expenses have been reduced by about 30% with 24% resulting from eliminating our mortgage payment. Second, I took on some part time jobs to generate wage income which will cover over 40% of this year's living expenses. In the future, I plan to work much less and only cover about 20% of our living expenses.

Going forward, our plan will be to increase spending in the higher return years, and cut back during the lower return years. In the near term, I also plan to do 1-3 part time jobs for interest or as needed.

Hopefully, in 2011, the economy will recover sufficiently so that we can return to our planned retirement spending. However, if economic conditions should worsen, we'll be ready to meet the challenge.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Wednesday, October 13, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to tenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 10/11/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments related to the post topic.

And now onto the Carnival:

Earning

Silicon Valley Blogger (#1) presents Hoping For A Job Promotion? How To Get Promoted At Work posted at The Digerati Life, writing, "In these difficult economic times, companies the world over are anxiously looking for people who can help their bottom line through innovative ideas and strategies. Believe it or not, any time could be the perfect time to get that promotion if you know what to do."

FIRE Getters presents Check Scam - Don't Be A Victim! posted at FIRE Finance, saying, "Let us present an anatomy of a check scam. Its always fun to unravel the details of a scam. The best part is to let our friends and relatives know about it so that they don't fall prey to ever new vicious scams ..."

James Fowlkes presents ETFs vs. Mutual Funds: No Contest posted at JamesFowlkes.com, saying, "If exchange traded funds (ETFs) are good enough for Harvard, shouldn’t they be good enough for you? Harvard University, the richest university in the United States, recently reported large purchases of ETFs that track international markets including China, Brazil and Russia."

Matt from Dividend Monk presents All About Dividend Growth Investing posted at Dividend Monk, saying, "An in-depth discussion on the benefits of dividend-growth investing, and how it can be a reliable method of exponentially growing wealth and passive income."

Dividends4Life presents 5 Companies Willing and Capable To Raise Dividends posted at Dividends Value, saying, "The main focus of dividend investing is finding and buying stocks that will continue to raise their dividends in the future. In making this determination there are many factors to consider such as dividend payout ratio, debt levels, the company’s dividend policy and track record."

Sun (#20) presents Where to Buy Gold posted at The Sun’s Financial Diary, writing, "If you are interested in investing in gold (there are also predictions that gold will hit $2,000/ounce), there are a few choices to add gold into your investment portfolio. "

Retiring

Mike Piper (#26) presents Planning Your Retirement Spending posted at The Oblivious Investor, saying, "Does it make sense for investors to plan to spend the same amount every year during retirement, or is there a better option?" An interesting approach to retirement spending which I had not heard of before.

FMF (#24) presents Eight Steps to Early Semi-Retirement posted at Free Money Finance, saying, "Have you ever wanted to retire early but just can't figure out how? How about early semi-retirement? This post gives the eight steps to follow to make your dreams of retiring early a reality."

Sunday, October 10, 2010

The last three years have been tough. A severe recession, high unemployment, and a slow recovery has created difficulties for a lot of people, including me. It's been easy to be cynical during this time.

Today, I realized the element of inspiration has mostly been missing the past three years. We should be thinking that things will get better because we will make it happen. As individuals, we will do what's necessary and rise to the occasion. That has been our history and it will continue to be our future.

No cynicism and more inspiration. That will be My Wealth Builder's focus going forward. I also intend to use inspiration more often in my personal interactions.

For more on New Beginnings, check back every Sunday for a new segment.

Friday, October 08, 2010

In the past year, I've worked at several seasonal part-time jobs with other retirees. Based on my experience, I've developed a list of qualities that make a job appealing to me as a retiree. If a job doesn't have these qualities, then I won't return in the following year. Here are the criteria that are important to me:

Good management. In most cases, the management at my part time jobs is acceptable. As a retiree, I don't need to put up with poor management. One of my jobs had very poor management. I definitely won't be returning next year.

Compatible colleagues. In my career, I've worked with my share of difficult colleagues. In retirement, I choose to work primarily with people with whom I enjoy working. Definitely less stress and more fun :-)

Full access to resources. I want access to all the necessary equipment, training and contacts to do my work.

I have one additional criteria that may not apply to other retirees -- the proximity of the work location. I prefer locations within five miles of my house. I won't take a job that is over 10 miles from our home.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, retirement or job advice. Please consult a professional advisor.

Thursday, October 07, 2010

In June 2007, she won the grand prize of $100 at our bank's annual festival. That same month she also won the "top prize" of two free domestic air tickets from a travel agency.

In the summer of 2010, our daughter began another streak of winning prizes. First, at a local charity event, her spin won the first $100 grand prize. Then at our church festival, she won at bingo twice. (Admittedly, she had a little assistance since she was only 6.)

Now, if she would only pick the winning numbers for Mega Millions or Powerball. Then it would really be a terrific lucky streak :-)

For more on Crossing Generations, check back every Thursday for a new segment.

Wednesday, October 06, 2010

Since we usually pay cash, budgeting for expected large expenses has helped us better manage withdrawals from our retirement savings.

First, we have several large expenses that we pay on an annual basis: insurance (health, auto, home) premiums, property taxes and income taxes due. We budget for these payments by calculating the equivalent monthly payment and adding that number to our monthly budget. That way we accumulate the money each month and have sufficient funds to make the payment when it's due.

Second, we have some large purchases that are more than a year away. For our next car purchase, my spouse has a separate account that is dedicated to saving money for that purpose. Currently, we have saved enough for about 1-1/2 new vehicles. This account is on track since we are about 5 years away from our next car purchase.

Third, for our daughter's future college education, we have been putting a set amount into a college 529 each year since she was one. Hopefully, the stock market will recover sufficiently to keep this account on track since she is still 13 years away from attending college.

A major expense area we do not currently budget for is home repair and improvement. Since we took care of many major items such as the furnace, air conditioning, roof and painting in the past four years, we consciously didn't set aside fund for the past few years. However, it's likely there will be some more major home improvements in the next 5 years so we will start setting aside money for this area again.

By budgeting money for these longer term expenses, we usually have close to 100% of the funds when needed and that minimizes the stress of having to make a large lump sum payment.

For more on The Practice of Personal Finance, check back every Wednesday Thursday for a new segment.

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

I pay $267 a year for my car insurance. For reference, I have the maximum liability limits, medical coverage, no deductible comprehensive, and $500 deductible collision. If I dropped comprehensive and collision coverage, my premium would be about $150 per year. There are two types of reasons for my insurance being low: situational factors and price discounts.

Situational Factors

Age - I'm over 50 which lowers my premium. The ages of 21 and 25 are other threshold year for males.

Marital status - Being married also lowers my premium.

Vehicle age - Every year the value of my vehicle declines which reduces the collision and comprehensive premiums. My truck is currently 7 years old.

Low mileage - We drive my spouse's car for most family trips. As a result, my truck is driven less than 7500 miles a year. In the past, I also had discounts for driving less than 10,000 and 12,000 miles a year.

Good driving record - I have only one accident from 1989 on my record. My spouse has no accidents.

Price Discounts

Multiple vehicles - We insure both our vehicles with the same insurance company.

Bundled insurance - We have all our property and liability insurance (auto, home and umbrella) with one company.

For reference, the same insurance coverage for a single 23 year old mail purchasing only car insurance is over $1200 per year. Surprisingly, if I purchased a 2010 Lexus IS350, my insurance premiums would still be fairly reasonable, rising to only $400 per year. For the single 23 year old male, the insurance cost on a 2010 Lexus IS350 would be $1850 per year.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or insurance advice. Please consult a professional advisor.

Welcome to ninth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 10/5/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments related to the post topic.

Investing

Carlos Sera presents A Mining Tale posted at Financial Tales, saying, "I thought it appropriate to release a tale that deals with investing or trading and one of the many pitfalls. Just remember after you read this tale 'All that glitters is not gold' " A good reminder that past results do not guarantee future performance.

This week there were three submissions on dividend paying stocks. As with any stock, it is important to do your own due diligence before making a purchase. For reference, we are are primarily buying dividend paying stocks when making purchases for our in our investment portfolio.

Dividends4Life presents 9 Dividend Stocks Giving Shareholders A Raise posted at Dividends Value, saying, "When it comes to selecting dividend stocks, one of the most important items to look for is consistency in raising dividends. Sure it is easy to increase dividends when the economy is booming and business is good, but to be consistent a company has to persevere and continue to increase dividends even during the tough times."

Mariah Gonzales presents 12 New Airline Fees And Creative Ways To Avoid Them posted at Operations Management, saying, "Airlines are now going into the business of gouging us left and right. They blame high gas prices and new security measures, but ultimately the consumer is the one paying. While there aren’t always ways to get around these new airline fees, there are creative ways to get around them."

Madison DuPaix (#5) presents 7 Frugal Moving Tips posted at My Dollar Plan, saying, "Great tips for those who are about to move. A new house or apartment is expensive as it is - save on the move!"

MoneyThinking presents Tips on Purchasing a New Car posted at Money Thinking, saying, "The economy is finally on the upswing, and most people watching the market are proclaiming that interest rates are the best they have been in years on many high-ticket items. One of those items is vehicles."

Saving

FIRE Getters presents $6000! Save Your Hard Earned Money! posted at FIRE Finance, saying, "We have all heard the saying, 'Tiny drops of water make an ocean.' Over years, life has taught us that tiny savings can go a long way in making us wealthy ..." The article shows how the magic of compounding can turn a little into a lot.

Taxes

Steve presents Tax Audit Lawyer 2009 Taxes posted at 2009 Taxes, saying, "Businesses are often targeted for tax audits, having a good tax audit lawyer can make a big difference in the outcome of your next audit." Here's an example of when it may be a good idea to hire an expert for doing taxes.

Monday, October 04, 2010

Here is our Q3 2010 Wealth Builder Ratios update. During the third quarter of 2010, the Dow, Nasdaq and S&P500 indices advanced 10.4%,12.3% and 10.7% respectively. Unfortunately, our investment portfolio did not do as well. My company stock did worse than the indices with a 0% return during Q3. Although the performance of my company stock has helped in the past, it held back our portfolio earnings this time allowing only a 1.4% for this quarter.

After a positive start in Q1, 2010 has turned negative. We have gone from a 0.77 gain to a 0.20 loss due to losses in the stock market in Q2. A large cash position has helped on the downside but not on the updside. Our large position my company stock is down 1% for the year which hasn't helped much either.

At this point, we are taking some profits from the September rally, and are raising cash to make additional purchases since we expect a market correction. Also, as my company stock advances, we plan to sell some shares and increase diversification.

Savingsto Salary

Target>202007=23 2008=16.7 2009=15.3

14.9

15.1

The Q3 savings ratio of 15.1 is still comparable to the Q3 2009 ratio of 14.6 which is discouraging. However, it feels like our retirement savings have stabilized which gives me some confidence of better returns coming.

During Q3, my company stock was flat while the Dow, Nasdaq and S&P 500 gained 10-12%. Our total savings are down 1.3% for 2010 which is below the positive 2-3% returns of the major indices for 2010.

(For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)

Both #1 and #2 were directlycorrelated with how well our stock, bond, and CD investments returns. With the flat performance of my company stock and the high proportion of cash, our portfolio was essentially flat Q3.

It has been very challenging retiring at the beginning of a bear market. Our short term expenses (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to resume an upward trend, hopefully sometime in 2011. I continue to be concerned about volatility of our investment portfolio, but believe there is more upside than downside potential going forward.

I continue to have the same financial goals for 2010. Hopefully, the markets will rebound into 2011, and allow our retirement investments to further recover.

For more on Strategies and Plans, check back every Monday for a new segment.

Sunday, October 03, 2010

"I can't go back. I know now that things will never be the same." ~ Eddie Money

Today we visited a neighborhood art fair where we lived in 10 years ago, prior to moving to overseas. The art festival was great. It was bigger, higher quality and greater variety than when we lived there. Afterwards, we decided to have dinner and visit a specialty shop.

That's when we were disappointed. Some places we frequented were no longer in business. The specialty shop had changed significantly. When we spoke with other patrons, they said the store had been the same for as long as they lived there which was about 6 years. Boy, we were showing our age :-)

However, we did find a new restaurant and new store that we enjoyed. So all was not lost.

The experience made me realize that our financial circumstances are in a similar situation of "can't go back." It would be great if our investments and home value could go back to 2007 at the height of the stock market and housing boom. But it isn't going to happen. We need to move forward and not long for the past. Just like today's experience in our old neighborhood, we'll need to find approaches and opportunities to grow our savings and investments in the new economic environment.

Friday, October 01, 2010

Ready For a Change reviews Michael S. Malone's book The Future Arrived Yesterday. The book describes a possible scenario for future corporations and future workers, one where corporations are small core operations and the majority of workers are drawn, as needed, from a cloud of contractors, freelancers, or consultants.

To me, cloud employment is already happening where some organizations hire people as temporary workers for projects when needed. For example, tax preparation companies hire a large number of seasonal employees for the January 1 to April 15 tax season. Another example are the standardized test grading companies that staff up during testing season. Finally, the hiring Census employees over the past two years is another excellent example. However, the use of cloud employees is not a widespread practice.

For most of my retiree part time jobs, I consider myself a cloud employee. I'm called in, based on my availability, when needed and off when not. The benefits are I can work when I want, choose the jobs I like and take off extended periods. The downsides are few or no employer provided benefits and lower pay which aren't issues for me since I have retiree benefits. Also for those interested in full time employment, cloud employment may create work gaps as one transitions between jobs.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or job advice. Please consult a professional advisor.

About Me

My wealth goal is to create a guaranteed yearly income stream equal to my highest salary for my retirement years. While I have developed a strategy to do this,
I am interested how others are thinking of achieving financial security for retirement.
This blog is a summary of facts, ideas, discussions, and action plans to achieve that goal.

Disclaimer

This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.

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Disclaimer:
This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results
based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.